S&P 500: Iran Deal Hopes Lift US Stocks as Ceasefire Deadline Nears

Stocks Edge Higher Tuesday as Trump Signals Iran Deal Progress

Trump said he expects a “great deal” with Iran before the ceasefire deadline and the market bought it. The Dow Jones Industrial Average gained roughly 270 points. The S&P 500 and Nasdaq posted modest gains. The Russell 2000 hit a fresh record. When fear leaves this market it leaves fast and small caps are usually the first to tell you.

Technical Outlook

The S&P 500 Index (SPX) is edging higher on Tuesday and in a position to challenge the record high at 7147.52. This would signal a resumption of the uptrend. The trend is safe right now, but still vulnerable to a near-term correction especially after the formation of a closing price reversal top.

There is no resistance other than the record high at 7147.52. The nearest support is a short-term retracement zone at 6968.77 to 6926.59. Since the main trend is up, I expect buyers to come in on the first test of this area.

Even if the short-term support zone fails, the SPX is still well-supported by a rare combination of moving averages and retracement levels. The 50-day moving average comes in at 6779.28, the 50% level is at 6732.21, the 200-day moving average is at 6692.44 and the 61.8% level is at 6634.20. That’s a lot of long-term support.

So am I worried about a correction, not at all. I’m not too keen on chasing offers at current price levels, but I will be willing to buy dips into support areas because I have something to lean on if I’m wrong.

Trump’s Tone Shifted the Risk Calculus

Trump kept military action on the table if no deal is reached. Traders heard the softer part of the message and ran with it. Oil held steady after recent declines. That’s the tell. When oil stops responding to Iran headlines the fear trade is losing its grip.

Retail Sales Beat but the Details Matter

Retail sales rose 1.7% in March and beat expectations. Most of it came from higher gas prices so I wouldn’t get too excited about the headline number. Furniture and online shopping showed something real underneath it though. The consumer is still spending even with costs going up and that keeps the economy stable enough to give investors a reason to stay long.

What to Watch From Here

The ceasefire deadline is the only thing that matters right now. Oil and war headlines are still setting the tone and that isn’t changing until something gets signed. Tensions keep easing and this market keeps climbing. One bad headline and the gains disappear before most traders can react. I’ve watched that sequence play out all month and I don’t expect it to stop until there’s a real deal.

More Information in our Economic Calendar.